Advantages of Investing in Rental Properties

Buying property as investment is a good idea, especially with the way prices are appreciating these days. Many people Buy to Let investment, or rent, to tenants. Doing your property investment this way can carry some advantages over buying property to rehab and sell.

Cash flow

An investment property that you rent out offers you a good, steady cash flow opportunity. When you rent, you get the monthly rental payment from your tenant, usually on a long-term basis, as most leases are a year long. Most renters also expect that their rent is going to go up each time they sign a new lease, so you have a built-in yearly increase in your investment cash flow.

Appreciation

Another good reason to invest in rental property is the strong likelihood of appreciation. Though real estate can and has experienced downturns, it generally appreciates at a good clip over time, and in certain periods, real estate can gain in value by double digits on an annual basis. That gives you an asset that not only produces regular cash flow but also grows in value.

Fewer upfront costs

Rental property typically does not require as much upfront investment as a property that you are buying to flip and sell. When you are doing a flip, you generally have to make everything in the home look brand new to sell quickly and get top dollar. With a rental property, while you have to make sure everything is up to code and you make the property presentable, you do not have to put in high-end finishes, as these are not things that most renters expect or want to pay a premium for.

When you are considering a real estate investment, keep these and other advantages of rental properties in mind as you weigh your decision.